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FALCON GROUP

Taxation
Final Assignment
BBA (Hon’s)

12
Taxation

Dept. of Management Science

FINAL TERM ASSIGNMENT

SUBMITTED TO:
SIR Arif Hussain

SUBMITTED BY:
“FALCON GROUP”
Hashim Mehmood………………...…..10120

Babrus Ali Khan……………………....10145

Muhammad Yousaf…………………...10250

Khadija Muqadas………………..….…10204

Nida Ijaz…………………………....….10258

Saman Khan………………………..….10247

SUBMISSION DATE: 19 /12/2012

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In the name of Allah, the Most Beneficent and the most Merciful

”And (Allah) has subjected to you all that is in heavens and all that is in the earth. Verify in it
are signs for the people who thinks deeply”.

(Al-Quran: 41; 53)

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DEDICATION
We dedicated our work to the most respectful personality of the world
and beloved PROPHET (PBUH) of Allah then to our parents, teachers, friends and all
those persons who prayed and helped us in our project.

This work is submitted as a memory to the Department of MS, Superior University


Lahore for the practical fulfillment of the requirements for the degree of BBA.

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ACKNOWLEDGEMENTS
On the successful completion of this Final Term ASSIGNMENT, First
of all we thank to Allah who gave courage and intelligence to complete it. ALLAH is the
one who gave us courage and made us the super creature with great knowledge and
able us to accomplish this work. Success is hard to achieve and we thanks to GOD
ALLMIGHTY for giving us valor to finish this Assignment successfully. In this regard we
thank our supervisor Sir Arif Hussain Ijaz for sharing their precious experience in
Taxation, who always gave us kind attention whenever we consulted him. He encouraged
us with kindness and the time that we spent with him was really the precious moments.
At the end we must be grateful to our parents who gave us not only time but
everything they could manage for us, for our studies and for our happiness and we are with
their prays whatever we are now.

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Executive Summary

We prepare this assignment For the purpose of fulfillment of our Taxation


Course requirement, for this assignment we visit MILLAT EQUIPMENT LIMITED and met with
the Senior Account manager and tax manager for better acknowledging our self. An d then we
prepare our assignment by helping the Internet facilities.

This document is the project that we conducted on Taxation for practical experience.
This project has been developed to give an overview of old and new Tax structure and to give a
brief description about the Tax System in Pakistan and other participating factors.

In the end, experience we gained much knowledge in the Taxation course is given along
with the details of assignments and projects accomplished by us.

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Administrative structure
The Administrative Structure of Federal Board of Revenue is the chairman
FBR/secretary Revenue Division, is assisted by 10 Members; member customs; Member IRS; Member
Enforcement and with Holding Taxes; Member Taxpayer; Member Facilitation and Taxpayer
Education(FATE) ; Member Accounting; Member Administration; Member HRM; Member Legal;
Member Strategic Planning and Statistic (SP&S).

The Member Facilitation and Taxpayer Education (FATE) is also official spokesperson of FBR.

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In Pakistan the tax Structure is based on following heads, as follow.

Taxation System.

Federal taxes in Pakistan like most of the taxation systems in the world are classified into two
broad categories, viz., direct and indirect taxes. A broad description regarding the nature of administration
of these taxes is explained below:

Direct Taxes
Direct taxes primarily comprise income tax, along with supplementary role of wealth tax.
For the purpose of the charge of tax and the computation of total income, all income is classified under
the following heads:

1. Salaries
2. Interest on securities;
3. Income from property;
4. Income from business or professions
5. Capital gains; and
6. Income from other sources.

Personal Tax
All individuals, unregistered firms, associations of persons, etc., are liable to tax, at the rates
ranging from 10 to 35 per cent.

Tax on Companies
All public companies (other than banking companies) incorporated in Pakistan are assessed for
tax at corporate rate of 39%. However, the effective rate is likely to differ on account of allowances and
exemptions related to industry, location, exports, etc.

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Inter-Corporate Dividend Tax


Tax on the dividends received by a public company from a Pakistan company is payable at
the rate of 5% and at the rate of 15% in case dividends are received by a foreign company. Inetr-corporate
dividends declared or distributed by power generation companies is subject to reduced rate of tax i.e.,
7.5%. Other companies are taxed at the rate of 20%. Dividends paid to all non-company shareholders by
the companies are subject to withholding tax of 10% which is treated as a full and final discharge of tax
liability in respect of this source of income.

Treatment of Dividend Income


Dividend income received as below enjoys tax exemption, provided it does not exceed Rs. 10,000/-.

1. Dividend received by non-resident from the state enterprises Mutual Fund set by the Investment
Corporation of Pakistan.
2. Dividends received from a domestic company out of income earned abroad provided it is engaged
abroad exclusively in rendering technical services in accordance with an agreement approved by the
Central Board of Revenue.

Unilateral Relief
A person resident in Pakistan is entitled to a relief in tax on any income earned abroad, if
such income has already been subjected to tax outside Pakistan. Proportionate relief is allowed on such
income at an average rate of tax in Pakistan or abroad, whichever is lower.

Agreement for avoidance of double taxation


The Government of Pakistan has so far signed agreements to avoid double taxation with 39
countries including almost all the developed countries of the world. These agreements lay down the
ceilings on tax rates applicable to different types of income arising in Pakistan. They also lay down some
basic principles of taxation which cannot be modified unilaterally. The list of countries with which
Pakistan has concluded tax treaties is given below:

Austria
Belgium
Bangladesh
Canada
China
Denmark
Egypt
France
Finland
Germany
Greece
India
Indonesia
Iran
Ireland
Italy
Japan

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South Korea
Lebanon
Libya
Malta
Mauritius
Saudi Arabia
Singapore
Poland
Romania
Switzerland
Thailand
Sri Lanka
Sweden
Turkmenistan
U.K.
Turkey
Tunisia
Kazakhstan
U.A.E.
U.S.A

Customs
Goods imported and exported from Pakistan are liable to rates of Customs duties as prescribed
in Pakistan Customs Tariff. Customs duties in the form of import duties and export duties constitute about
37% of the total tax receipts. The rate structure of customs duty is determined by a large number of socio-
economic factors. However, the general scheme envisages higher rates on luxury items as well as on less
essential goods. The import tariff has been given an industrial bias by keeping the duties on industrial
plants and machinery and raw material lower than those on consumer goods.

Central Excise
Central Excise duties are livable on a limited number of goods produced or manufactured, and
services provided or rendered in Pakistan. On most of the items Central Excise duty is charged on the
basis of value or retail price. Some items are, however, chargeable to duty on the basis of weight or
quantity. Classification of goods is done in accordance with the Harmonized Commodity Description and
Coding system which is being used all over the world. All exports are exempted from Central Excise
Duty.

Sales Tax
· Sales Tax is levied at various stages of economic activity at the rate of 15 per cent on:
· All goods imported into Pakistan, payable by the importers;
· All supplies made in Pakistan by a registered person in the course of furtherance of any business carried
on by him;
· There is an in-built system of input tax adjustment and a registered person can make adjustment of tax
paid at earlier stages against the tax payable by him on his supplies. Thus the tax paid at any stage does
not exceed 15% of the total sales price of the supplies;

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PREVIOUS SET-UP
CENTRAL BOARD OF REVENUE
The Central Board of Revenue was the highest executive authority of Federal
taxes (CUSTOM, INCOME TAX, SALE TAX, and FEDERAL EXCISE) in Pakistan. It was a statutory
body appointed by the Federal Government for the purpose of Tax Collection in the country, by the
authority of Central Board of Revenue Act, 1924. (1-04-1924). The Central Board of Revenue (CBR) has
made a Task Force on improving taxation structure. The prime goal seems to broaden the tax base apart
from increased revenue collection, educated taxpayer, improved tax-GDP ratio, improved tax system and
decreased size of parallel economy.

The central Board of Revenue (CBR) was created on April 01, 1924 through enactment of the
Central Board of Revenue act, 1924. In 1944, a full-fledged Revenue Division was created under the
ministry of Finance. After Independence, this arrangement continued up to 31st August 1960 when on the
recommendations of the Administrative Re-organization Committee, FBR was made an attached
department of the ministry of Finance. In 1974, Further Changes were made to streamline the
organization and its functions. Consequently, the post of the Chairman FBR was created with the status of
ex-officio Additional Secretary Finance was relieved of his duties as ex-officio Chairman of the FBR.

In order to remove impediments in the exercise of administrative powers of a secretary to the


government and effective formulation and implementation of Fiscal Policies measure. The Status of FBR
as a revenue division was restored under the ministry of Finance On October 22, 1991. However, the
revenue division was abolished in January 1995, and FBR reverted back to the Pre-1991 position. The
revenue division continues to exist since from December 01, 1998.

FEDERAL BOARD OF REVENUE


Federal board of revenue replaced the Central Board of Revenue with effect from the 1st July
2007 under the Federal Board of Revenue act, 2007. The federal government shall appoint the chairman
and members of the board.

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FBR acts against leakage of secret information


The Federal Board of Revenue has issued a stern warning to the tax officials
saying that internal sources are leaking secret information to the print media, adding that action would be
taken against those found involved in leakage of FBR correspondences, orders, notes and minutes of
meetings to the reporters of national dailies. In this regard, the FBR has issued a circular to the Board
officials here on Wednesday. This is for the first time that the FBR has issued such instructions barring
the tax officials from sharing information of public interest, legal interpretations, correspondences, orders
and notes to the print media. The FBR has decided to take strict action against the internal sources
providing information to the correspondents of print media.

According to the circular (leakage of secret information) issued here on Wednesday, the
competent authority has taken serious notice of the news items appearing in various National Dailies
recently which contained details of the internal correspondence/ notes/ orders/ meetings of FBR. It clearly
indicates that the information has been leaked out by some Internal Source. It goes without saying that
reporting official business to the press without authorization is highly inappropriate and against the
government instructions. Officers/ officials are, therefore, advised to adhere to the government
instructions and any lapse in this regard will be viewed seriously. This issue with the approval of

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competent authority, FBR circular added. When contacted, a tax expert said that the FBR has failed to
place the Customs Valuation Rulings on its website.

The FBR has made a valuation gateway at its website, but no Customs Valuation Rulings has
been seen which are very important for the importers and investors. At the same time, the FBR has also
not placed important instructions issued to the Large Taxpayer Units (LTUs) and Regional Tax Offices
relating to the interpretation of tax laws and important legal issues involving taxation matters. The FBR
directives and instructions on different legal issues have been communicated to the field formations on
daily basis, but never placed on the website. The business community is not aware of the day to day
changes taking place in tax laws due to non-availability of FBR instructions and directives to the business
and trade. The FBR instructions, which involve interpretation of tax rates and laws, are very important for
the business as well as general public. However, no FBR instructions to the LTUs/RTOs involving
serious taxation matters have been placed on the website. The issuance of such kind of FBR instructions
(leakage of secret information) would only stop the communication of important information pertaining to
taxes to the general public.

The FBR has never placed Special Exemption Orders of Sales Tax, Federal Excise Duty and
Customs Duty etc on its website due to unknown reasons. Commenting on the FBR instructions, another
tax expert said that the FBR has declared publication of instructions/correspondences and FBR orders as
also leakage of secret information, which is not clear. How the publication of FBR routine orders could be
declared as leakage of secret information? They raised a question. Secondly, if an important taxation issue
directly relating to the imposition of tax has been communicated to the LTUs/RTOs through a
Clarification, how publication of such clarification is a crime and leakage of secret information? A tax
expert said. Interestingly, the FBR introduced an electronic system of E-DOX at its headquarters for
ending the manual maintenance of files and letters. In the presence of E-DOX, the FBR is still maintaining
all kinds of files and letters manually.

The E-DOX has been working for the last few years, but manual maintenance of files is going on
at the level of the FBR. Analysts say that ours is not Indian board of revenue where talk of secrecy and
information leakage is important. It is Pakistani revenue board, which should take into confidence all the
stakeholders and share with them all the information freely, which has direct bearing on the tax matters.
In the past, the FBR used to release monthly figures of revenue collection to the media including chart of
revenue collection. However, the revenue collection of FBR for the month of April 2011 has not been
officially released by the Board. The exercise of releasing revenue collection figures has been
discontinued. The FBR has placed revenue collection position of July-March 2010-11 on its website, but
no figures of revenue collection of April 2011 have been made available on the FBR website. It is
important to mention that the FBR has already imposed a strict ban on the entry of journalists due to
budget exercise for the last few weeks. The ban on the entry of reporters into the FBR Headquarters
would continue till announcement of the budget. The electronic barrier at the entry of the FBR has already
barred the reporters from entering into the FBR headquarters.

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PREVIOUS STRUCTURE OF SALE TAX DEPARTMENT.


Collectorates of Sale tax in Pakistan
Following are the cities of collectorates of sale tax in Pakistan playing their roles being assigned by
authorities to collect sale tax as follow.

Peshawar
Rawalpindi
Faisalabad
Gujranwala
Lahore
Multan
Karachi (East)
Karachi (West)
Hyderabad
Quetta
Mirpur (A J & K)

Officers In Collectorate
Following are the officers in collectorates of sale tax in Pakistan doing their roles and responsibilities
being assigned to them by higher authorities as follow.

Collector
Additional collector
Deputy collector
Assistant collector
Superintendent
Deputy superintendent
Auditor
Lower staff

Departments In Collectorates
Following are the departments in Collectorate working in previous structure of Sale tax department as
follow.

1. Local Registration Office (LRO)


2. Audit
3. Adjudication
4. Refund

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Previous structure of Income Tax Department


Income tax Region In Pakistan
Following are the Income tax Regions In Pakistan were working in previous structure of
Income Tax Department as follow.

1. Northern………….Islamabad
2. Eastern…………. .Lahore
3. Central……………Multan
4. Southern...…… ….Karachi
5. Corporate………. .Karachi

Officers of Income Tax


Following are the officers of Income Tax, these are working in previous structure of Income
Tax and doing their responsibilities in previous period, as follow.

1. Regional Commissioner
2. Commissioner
3. Additional commissioner
4. Deputy commissioner
5. Assistant commissioner
6. Income tax officer
7. Special officer
8. Inspector
9. Lower staff

Offices of Income Tax


Following are the four Offices of Income tax which are being used in previous structure of
Income tax as follow.

1. Regional Commissioner Office (R.C)


2. Zonal Office (Commissioner).
3. Range (Additional Commissioner).
4. Circle (DC, AC, ITO, SO)

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Here we present over all Addresses of Offices of different Departments, as follow:

ADDRESS OF FBR FIELD OFFICES

INLAND REVENUE DEPARTMENT

1. REGIONAL TAX OFFICE, BAHAWALPUR

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE,21-A, SARWAR SHAHEED


ROAD, MODEL TOWN-A, BAHAWALPUR.

2. REGIONAL TAX OFFICE, SUKKUR

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICEQUEEN‟S ROAD, SUKKUR

3. REGIONAL TAX OFFICE, QUETTA

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE, INCOMETAX BUILDING,


SPINY ROAD, QUETTA

4. REGIONAL TAX OFFICE, SIALKOT

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE,INCOME TAX BUILDING,


KACHERY ROAD, SIALKOT

5. REGIONAL TAX OFFICE, SARGODHA

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE, University Road,


SARGODHA

6. REGIONAL TAX OFFICE, KARACHI

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE-I,INCOME TAX BUILDING,


SHAHRAH- E-KAMAL ATA TURK, KARACHI.

7. REGIONAL TAX OFFICE, FAISALABAD

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE,INCOME TAX


COMPLEX,OPPOSITE ALLIED HOSPITAL, JAIL ROAD,FAISALABAD

8. REGIONAL TAX OFFICE, MULTAN

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE, LMQ ROAD, NAWAN
SHAHER, MULTAN.

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9. REGIONAL TAX OFFICE, RAWALPINDI

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE, INCOMETAX BUILDING,


12 MAYO RAOD, RAWALPINDI

10. REGIONAL TAX OFFICE, GUJRANWALA

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE,NEW INCOME TAX


COMPLEX, OPPOSITE GULSHAN COLONY, G.T ROAD,GUJRANWALA

11. REGIONAL TAX OFFICE, PESHAWAR

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE,INCOME TAX BUILDING


JAMRUD ROAD,PESHAWAR

12. REGIONAL TAX OFFICE, HYDERABAD

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE, A-49, SITE AREA,
HYDERABAD

13. REGIONAL TAX OFFICE, ABBOTTABAD

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE,INCOME TAX


BUILDING,MAIN MANSEHRA ROAD, OPPOSITE CANTT:GARDEN, ABBOTTABAD.

14. REGIONAL TAX OFFICE, LAHORE

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE,INCOME TAX BUILDING


,SYED MAUJ-E-DARYA ROAD, LAHORE

15. REGIONAL TAX OFFICE, ISLAMABAD

OFFICE OF THE CHIEF COMMISSIONER, REGIONAL TAX OFFICE,20 KHYABAN-E-


SUHRAWARDY, MAUVE AREA, G-9/1, ISLAMABAD

16. DIRECTOR (MIS) COMPUTER WING (IR), ISLAMABAD

OFFICE OF THE DIRECTOR MIS, COMPUTER WING, INLAND REVENUECDA BLOCK-II,


NEAR LAL MASJID, ISLAMABAD

17. DIRECTORATE GENERAL OF INTELLIGENCE & INVESTIGATION


(IR),ISLAMABAD

OFFICE OF THE DIRECTORATE GENERAL OF INTELLIGENCE &INVESTIGATION (INLAND


REVENUE), 110-H, Luqman Hakeem Road, G-6/3, ISLAMABAD.

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18. DIRECTORATE GENERAL OF INTERNAL AUDIT (IR), ISLAMABAD

OFFICE OF THE DIRECTORATE GENERAL OF INTERNAL AUDIT (INLANDREVENUE), CDA


BLOCK.NO. II, 1ST FLOOR NEAR LAL MASJID, ISLAMABAD.

CUSTOMS DEPARTMENT

19. Model Customs Collectorate, Multan.

OFFICE OF THE COLLECTOR, MODEL COLLECTORATE,LMQ Road, Multan.

20. Model Customs Collectorate, Islamabad.

OFFICE OF THE COLLECTOR, MODEL COLLECTORATE, Mauve Area, G-9/1, Islamabad

21. Model Customs Collectorate, Lahore.

OFFICE OF THE COLLECTOR, MODEL CUSTOMS COLLECTORATE,64-C, Gulberg-III, Near


Firdous Market, Ali Zaeb Road, Lahore.

22. Model Customs Collectorate (Preventive), Karachi.

OFFICE OF THE COLLECTOR, MODEL CUSTOMS COLLECTORATE(PREVENTIVE),Customs


House, Karachi.

23. Model Customs Collectorate (Exports), Karachi.

OFFICE OF THE COLLECTOR, MODEL CUSTOMS COLLECTORATE (EXPORTS), 3rd Floor,


Customs House, Karachi.

24. Model Customs Collectorate (Appraisement), Karachi.

OFFICE OF THE COLLECTOR, MODEL CUSTOMS COLLECTORATE (APPRAISEMENT),


Customs House, Karachi.

25. Model Customs Collectorate, Quetta.

OFFICE OF THE COLLECTOR, MODEL CUSTOMS COLLECTORATE,

Customs House, Chamman Road, Quetta.

26. Model Customs Collectorate, Hyderabad.

OFFICE OF THE COLLECTOR, MODEL CUSTOMS COLLECTORATE,49-A, S.I.T.E Area,


Hyderabad.

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27. Model Customs Collectorate, Port Muhammad Bin Qasim, Karachi.

OFFICE OF THE MODEL CUSTOMS COLLECTORATE, PORT MUHAMAMD BIN QASIM,


KARACHI

28. Model Customs Collectorate, Sialkot.

OFFICE OF THE COLLECTOR, MODEL COLLECTORATE, Sambrial Dry port, Sialkot.

29. Model Customs Collectorate, Faisalabad.

OFFICE OF THE COLLECTOR, MODEL COLLECTORATE, Dry port, Faisalabad.

30. Model Customs Collectorate, Peshawar.

OFFICE OF THE COLLECTOR, MODEL CUSTOMS COLLECTORATE, Jamrud Road, Peshawar.

31. Model Customs Collectorate, Gwadar.

OFFICE OF THE COLLECTOR, MODEL CUSTOMS COLLECTORATE, Customs House, Gaddani,


Gwadar

32. Directorate of Internal Audit (Customs), Lahore.

OFFICE OF THE DIRECTOR OF INTERNAL AUDIT (CUSTOMS), 7-E, Model Town, Lahore.

33. Directorate General of Internal Audit (Customs), Islamabad.

OFFICE OF THE DIRECTOR GENERAL OF INTERNAL AUDIT (CUSTOMS),CDA Block No.3, Old
CBR Building, Near Lal Masjid, Islamabad.

34. Directorate of Internal Audit (Customs), Karachi.

OFFICE OF THE DIRECTOR OF INTERNAL AUDIT (CUSTOMS), Sales Tax House, Near Old Subzi
Mandi, University Road, Karachi.

35. Directorate General of Customs (Valuation), Karachi.

OFFICE OF THE DIRECTORATE GENERAL OF CUSTOMS (VALUATION), 7th & 8th Floor,
Customs House, Karachi.

36. Directorate General of Training & Research (Customs), Lahore.

OFFICE OF THE DIRECTOR GENERAL OF TRAINING & RESEARCH(CUSTOMS), Sutlej Block,


Allama Iqbal Town, Lahore.

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37. Directorate of Training & Research (Customs), Islamabad.

OFFICE OF THE DIRECTOR OF TRAINING & RESEARCH (CUSTOMS),CDA Block-3, Near Civic
Centre, Masjid Road, G-6, Islamabad

38. Directorate of Training & Research (Customs), Karachi

OFFICE OF THE DIRECTOR OF TRAINING AND RESEARCH (CUSTOMS), OldCustoms House


Building, Eduljee Dinshaw Road, Karachi.

39. Directorate General of Intelligence & Investigation (Customs), Islamabad.

OFFICE OF THE DIRECTORATE GENERAL INTELLIGENCE &INVESTIGATION (CUSTOMS),


Plot No.1, Mauve Area, G-10/4, Islamabad.

40. Directorate General of Post Clearance Audit, Islamabad.

OFFICE OF THE DIRECTORATE GENERAL OF POST CLEARANCE AUDIT(CUSTOMS), Mauve


Area, G-9/1, Islamabad.

41. Directorate of Post Clearance Audit, Karachi.

OFFICE OF THE DIRECTOR OF POST CLEARANCE AUDIT (CUSTOMS),4th Floor, Customs


House, Eduljee Dinshaw Road, Karachi.

42. Chief Coordinator, Computerization & Programming (Customs), Karachi.

OFFICE OF THE CHIEF COORDINATOR, COMPUTERIZATION &PROGRAMMINING


(CUSTOMS), Customs House, Karachi.

43. Chief Collector of Customs (South), Karachi.

OFFICE OF THE CHIEF COLLECTOR OF CUSTOMS (SOUTH), 8th Floor, Customs House, Karachi.

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Current Set Up
Federal Board of Revenue (FBR)
Federal board of revenue replaced the Central Board of Revenue with effect from the 1st
July 2007 under the Federal Board of Revenue act, 2007. The federal government shall appoint the
chairman and members of the board.

Federal board of revenue (FBR) has been working with two main Head‟s as per our
assignment requirements these are as follow:

Customs
Inland Revenue Services

The description of two Heads as follow.

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1. Customs

Mr. Muhammad Riaz

Member Custom’s

Mr.Muhammad Riaz a BS-21 officer is the member customs in the FBR Headquarters
since July 13, 2012. Having worked as commercial counselor Paris (1995-99), counsel general Istanbul
(2002-2006) and subsequently as Director General, Prime Minister‟s Secretariat and Director General
Customs Intelligence/Investigation, he brings vast and diversified experience to his present assignment.
Mr. Riaz holds master‟s degrees in Development Economic and Williams College, Massachusetts USA
and Defence Strategic Studies from National Defence University, Islamabad.

Pakistan Customs

Introduction
Pakistan Customs is the guardian of Pakistan Borders against movement of Contra Band
Goods and is facilitators of bona fide trade. Its provide a major source of revenue to the government of
Pakistan in the form of taxes levied on the goods traded across the borders. It also helps to protect the
domestic industry, discourage consumptions of luxury and stimulate development in the under developed
areas.

Act’s/Rule’s of custom in Pakistan

In Pakistan the Custom is been working under some rule‟s and Act‟s, custom must have to
followed these act‟s or Rule‟s for legally working here in Pakistan. Following are the Rule‟s or Act‟s
been used in Pakistan as follow.

Custom’s Act’s

Following are the Act‟s of Customs as follow:

1. Customs Act‟s, 1969 (Amended up to 30th June 2012)


2. Custom‟s Act, 1969 (Amended Up to 30th June 2011
3. Custom‟s Act, 1969 (Amended Up to 30th June 2010)
4. Customs Act ,1969 (Amended up to 30th June 2009)
5. Customs Act ,1969 (Amended up to 30th June 2008)
6. Customs Act ,1969 (Amended up to 30th June 2007)

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Custom’s Rule’s
In Pakistan the Custom‟s Rules is been using as the Custom‟s Rules 2001

Custom’s Notifications
In Pakistan under the Federal Board of Revenue following Notifications are been using, these notification
as follow:

1. Active/Operative Notification‟s/SRO‟s Imports


2. Active/Operative Notification‟s/SRO‟s Exports
3. Amending/Archived Notification‟s

National Entry and Exit Point

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Inland Revenue Services

Mr. Asrar Raouf

Senior Member Policy (Inland Revenue)

Mr. Asrar Raouf is the senior member policy (Inland Revenue) in the FBR headquarters.
Mr. Asrar Raouf a senior officer of Inland Revenue Services held various key positions serving across the
country in his illustrious career spanning over 34 years. He accumulated vast experience in change
management strategies, reviving the sick public sector enterprises, taxation policy formulation for
domestic and international taxes, finance, and administration. Other feathers in his cap include:

Co-authoring of basic concept paper for Tax Administration Reforms Program.


Launching of Large Tax Payers Unit that has now become a standard taxation Operation.
Transformation of Regional Tax Offices from circle based tax system to functional lines
Operation.

Being an outspoken person and expert in tackling all taxation and administrative issues he
remained Official spokesman of the Federal Board of Revenue for a long time. Due to his vast
knowledge, experience and administrative skills, he was elevated to the post of Federal Secretary of
Capital Administration and Development Division prior to his posting as Senior Member Policy (Inland
Revenue) in the FBR Headquarters.

Inland Revenue Wing

1. Chief IR (HQs)
2. Chief (ST/FED - Policy)
3. Chief (Income Tax - Policy)
4. Chief IR(Operations)
5. Chief IR(Audit)
6. Chief IR(Automation)

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About Inland Revenue Wing


Domestic Taxes, comprising Income Tax, Sales Tax and Federal Excise Duty,
constitute about 90% of the Revenue collected by FBR. These taxes are not only similar in essence, but
also are interdependent in practice. The time tested international tenor vindicates the same. The
assimilation of these taxes into a single administrative structure was imminent since long, but never in the
history of the Pakistan‟s Economy, was the need so great for the materialization of this change. Spurred
by these exigencies and with a view to apply the modern taxation techniques to improve the tax to G.D.P
ratio, the Inland Revenue Wing of the FBR was created, combining the three domestic taxes.
It is expected that the inception of this wing would facilitate the taxpayers, as it would provide
them to carry through their tax matters in one organizational structure. The creation of this wing would
also be conducive for the tax administration, as the access to the taxpayer‟s data in respect of different
domestic taxes would be easily available.

Three Head‟s under Inland Revenue Services, As follow:

1. Income Tax
2. Sales Tax
3. Federal Excise

The Description of all as above heads as follow:

Income Tax
Taxation according to a person‟s ability to pay is universally accepted principle, and income
is considered a satisfactory though not a sufficient index of such ability to pay. Income Tax is, therefore,
generally recognized as a highly equitable form of taxation. A tax levied on income can normally be
shifted to others and thus its incidence is on those for whom it is intended. Since income tax is
progressive in nature, it tends to reduce economic disparity. Tax rates and method of calculating taxable
income varies with fiscal status of the tax payer. Following are the broad categories of taxpayers:-

Companies
Association of Persons (AOP)
Non Salaried Individuals
Salaried individuals

Under the Federal Board of Revenue the income tax is being displayed as below:

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Taxation

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Taxation

Federal Excise

The Federal Excise Act, 2005, was promulgated with effect from 1st July, 2005, repealing the
Central Excises Act, 1944. Following are some of the significant changes brought about by the new Act:

 The word “Federal” was used in place of “Central”. Therefore, now the term “Federal Excise
Duty” is more appropriate as compared to old “Central Excise Duty” for the duties of excise
levied under the 2005 Act.
The system of physical supervision has been entirely done away with and now all clearances will
be self-assessed and no prior permission for clearance will be required.
The payment of duty will be on monthly basis and the duty on all clearances during the month
will be payable by the 15th of next month. This is in contrast to previous requirement of payment
of duty prior to clearance.
No gate passes are required for clearances as in the old system.
Double taxation has been eliminated by allowing adjustment of the excise duty paid on the input
goods used directly in the manufacture of excisable goods.
 On some services and goods FED is payable in VAT more i.e. in the same manner as provided in
the Sales Tax Act, 1990. For details see the link „Goods/Services Liable to Excise Duty‟ on this
page.

Federal Excise Duty is payable on:


1. Goods produced or manufactured in Pakistan.
2. Goods imported into Pakistan
3. Such goods as the Federal Government may, by notification in the official Gazette,
specify, as are produced or manufactured in the non-tariff areas and are brought to the
tariff areas for sale or consumption therein.
4. Services, provided or rendered in Pakistan

Special Excise Duty


As part of budgetary measures for the year 2007-08, Special FED at 1% has been levied
on goods which are manufactured or are imported in Pakistan. This duty is in addition to FED as
prescribed in First Schedule of the Federal Excise Act, 2005. For list of goods excluded from purview of
this special duty and other details see SRO 655(I)/2007.

As mentioned on FBR website the Federal Excise is been displayed as:

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Taxation

Sales Tax
Sales Tax was a provincial subject at the time of partition. It was being administered in the
provinces of Punjab & Sindh as provincial levy. Sales tax was declared a federal subject in 1948 through
the enactment of General Sales Tax Act, 1948 and in 1952, this levy was transferred permanently to the
Central Government. Sales tax was levied at the standard rate of 6 pies per rupee at every stage whenever
a sale was affected. The trading community protested against this system, and this resulted in the
enactment of Sales Tax Act 1951.
A system of licensed manufacturers & wholesalers was instituted whereby they were
allowed to purchase goods free of sales tax from each other and pay tax on sales to unlicensed traders.
Imports were chargeable to Sales Tax but the licensed manufacturers & wholesalers were allowed to
import goods without the payment of Sales Tax. Later on Sales Tax became chargeable on locally
produced & imported goods at the time of their sales & import, respectively. The sales tax, was collected
under the Finance Ordinance, 1956, on goods which were chargeable to Central Excise Duty, as if it were
a duty of Central Excise. In April 1981, by virtue of an amendment in the Sales Tax act, 1951, the
collection of Sales Tax on non-excisable goods was also entrusted to the Central Excise Department.

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Taxation

In the late eighties the government decided to replace Sales Tax with the Value Added Tax in the
country as a part of its structural adjustment program which was undertaken to correct anomalies &
distortions both in our tax & non-tax regimes. Accordingly new enactment titled Sales Tax Act 1990
replaced Sales Tax Act 1951 with effect from 1-11-1990.

Liability to sale tax


Following sectors are required to get registration for sales tax and charge sales tax on their supplies/
services:

Manufacturing
Import
Services
Distribution, Wholesale & Retail stage.

Previously it was being charged at the manufacturing & import stage, and its scope has been
extended now to remaining sectors.
Sales Tax is chargeable on all locally produced and imported goods except computer software,
poultry feeds, medicines and unprocessed agricultural produce of Pakistan and other goods specified in
Sixth Schedule to The Sales Tax Act, 1990.

Registration
Every person in sectors mentioned above, who makes a taxable supply in Pakistan is
required to be registered under the Sales Tax Act. However, manufacturers having taxable turnover below
five million rupees and also utility bill below Rs. Seven lac during the last twelve months are exempted
from registration and payment of sales tax. Similar exemption is also available to retailers having total
turnover below Rs. five million in the last twelve months.
The rate for sales tax is 16% of value of supplies. However, there are some items which are
chargeable to sales tax at 18.5% or 21% of value of supplies (see SRO 644(I)/2007 as amended by SRO
537(I)/2008 dated 11th June 2008)
The Registration Form(s) are submitted to the Central Registration Office, FBR, or Sales Tax
Collectorates/ RTOs for the allotment of a Registration Number by the persons liable to be registered
under the Sales Tax Act. The taxpayer is then issued a Certificate of Registration.

As mentioned on FBR website the Sales Tax is been displayed as:

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Taxation

Large Taxpayer Unit (LTU)


In Pakistan three Large Taxpayer Units are been working their roles with their assigning
responsibilities, following are the Large Taxpayer Unit‟s held in Pakistan as follow:

1. Karachi Large Taxpayer Units (LTU)


2. Lahore Large Taxpayer Units (LTU)
3. Islamabad Large Taxpayer Units (LTU)

The description of all as above mentioned Large Taxpayer Units (LTU) as follow:

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1. Karachi Large Taxpayer Units (LTU)


LTU Karachi, being the first pilot project of FBR, was launched on 1st July 2002,
symbolizing the new face of FBR tax administration. The Tax Administration Reforms Program in
Pakistan (TARP) envisages a complete shift from conventional bureaucratic concept of enforcement to
voluntary compliance, from periodic assessment to risk based audit and from traditional aloofness to
proactive taxpayers' facilitation.

LTU is a modern, integrated, effective and efficient unit of tax administration in Pakistan which
promotes mutual trust and satisfaction both for the taxpayers and the tax collectors.

“OUR MISSION IS TO PROVIDE QUALITY SERVICES TO LARGE


TAXPAYERS BY FACILITATING THEM TO UNDERSTAND AND MEET THEIR TAX
OBLIGATIONS BY FAITHFULL COMPLIANCE TO TAX LAWS. APPLYING TAX
OBLIGATIONS WITH INTEGRITY AND FAIRNESS TO ALL”.

Our Goals:
 To perform as a role model for the tax administration in Pakistan by providing integrated tax
services (i.e. administration, technology, human resource).
 To improve taxpayers voluntary compliance with the tax laws through dynamic programs.
 To provide top quality service to each client.
 To increase productivity by providing a quality work environment and adequate compensation to
employees.

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Taxation

Values:

 Integrity
 Professionalism
 Responsiveness
 Espirit de corps
 Courtesy
 Transparency

Strategy:
Tax compliance & collection facilitated by providing a range of support functions
 Taxpayers Service & Education
 Information Processing
 Risk Based Audit
 Dispute Resolution
 Human Resource Management
 Information Technology

 Developing new compliance strategies by monitoring compliance performance


 Developing new audit products and audit activities
 Influence tax behavior by gathering intelligence on current commercial practices
 Develop insights into global business practices & international agreements to improve tax
collection services
 Provide advice to create better awareness of tax laws, resulting in voluntary compliance

 Develop consultative forums and close working relationship with commercial and
industry groups and tax consultants, to exchange information and ideas
 Develop capacity for technical, investigative and service oriented administration
 Facilitate taxpayer by providing on-line case status

The Organogram of Karachi Large Taxpayer Unit (LTU) as given below:

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2. Lahore Large Taxpayer Units (LTU)


Federal board of revenue welcomes you to the Large Taxpayer unit (LTU) Lahore. The
unit is working at 6-7 Floor, Income tax House, and Nabha Road, Lahore. The LTU handle all domestic
taxes (income tax, sales tax & federal excises) of most of the Lahore based, which qualify the criteria laid
down for selection of cases in LTU and those which belong to the following sectors.

 Banks
 Non-Residents
 Oil and Gas
 Sugar
 Cement
 Textiles
 Beverages
 Paper and Paper Board
 Automobiles

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Taxation

The LTU start functioning with around 200 taxpayers of Lahore region, the number
was later increased it 250. It is an integrated tax administration, catering for all federal domestic taxes,
such as income tax, sales tax and federal excise duty operating jointly from one location. This interfacing
and integration has helped substantially reduce irritants to taxpayers, smooth-out the tax administration
and has proved to be a model for developing the approaches, attitudes and behavior that were followed by
other organs of the FBR. Integrity, transparency, accountability and understanding of problems from
taxpayer‟s point of view are the guiding principles of the workforce. The teams of Income Tax and Sales
Tax personal carry out joint operation to conduct composite audits of taxpayers selected for this purpose.

Brief History of Lahore Large taxpayer Unit (LTU)


Our Tax Collection system involves two major stake holders in Government of
Pakistan, Taxpayers and the Collectors. In the old system none of these satisfied with the upcoming
results. The result was that a huge project of tax reform was taken up. The law was changed / simplified
and the concept of universal self assessment scheme was introduced. The compensation package for the
tax collectors was improved. The result was that the government started getting more revenue.

LTU Lahore is second of its king in Pakistan after Karachi. It was established on September 01,
2004 in the old income tax office at Nabha road Lahore. After refurbishment of 6th and 7th floor of tax
house, it shifted there on June 16, 2005. The concept of large taxpayers unit was tried in Pakistan after its
great success in various devoped and developing economies of the world. The basic idea behind it was, to
facilitate the top 20% of taxpayers who contribute around 80% of revenue towards the national
exchequer. A tour of this web site would reveal that‟s it has excellent facilities for the taxpayers and the
tax collectors as well. Thus is a frequent interaction between the two sides for removal of barriers of
misadjusted ending and lack of trust. This has left a very positive result on the overall performance of this
unit.

Organization Chart of Lahore Large Taxpayer (LTU).


Written by Administrator 29 May 2012

 Income Tax Audit


 Income Tax Enforcement & Collections
 Income Tax Legal
 Sales Tax Audit
 Sales Audit Enforcement & Collection
 Taxpayers Facilitation Management
 Information Procession

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Taxation

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3. Islamabad Large Taxpayer Units (LTU)


Large Taxpayer Unit (LTU) Islamabad, Federal Board of Revenue has achieved a new
landmark, showing 729 percent increase in the income tax collection out of current demand created
during July-March (2011-12) as compared to the corresponding period of last fiscal.

Sources told Business Recorder here on Monday that the performance of the LTU Islamabad
during July-March (2011-12) has shown remarkable growth in all taxes particularly recovery of income
tax arrears. The latest data revealed that the income tax collection out of current demand created was Rs
20.8 billion during July-March (2011-12) against Rs 2.5 billion in the same period last fiscal, reflecting an
exceptional increase of Rs 18.3 billion.
In percentage terms, there is a record increase of 729 percent in the income tax collection out of
current demand created during the period under review. Similar kind of positive trend has been observed
in the income tax demands created by the LTU Islamabad. Income tax demand of over Rs 95 billion has
been created during this period against Rs 43 billion in the corresponding period last fiscal, showing an
extraordinary increase of 120 percent.
The ongoing performance of the LTU Islamabad would enable the FBR to achieve the ambitious
revenue collection target of Rs 1952 billion by the end of current fiscal. According to the data, LTU
Islamabad has collected Rs 107.648 billion as income tax during July-March (2011-2012) against Rs 73
billion in the corresponding period of last fiscal, showing a growth of 47 percent.

The collection of sales tax was Rs 91.078 billion during the first nine months of current fiscal
against Rs 81 billion in the same period last fiscal, showing an increase of 12 percent. During this period,
LTU Islamabad has collected Rs 33.158 billion as Federal Excise Duty (FED) during July-March (2011-
2012) against Rs 31.726 billion in the corresponding period of last fiscal, showing a growth of five
percent.
Sources acknowledged that Chief Commissioner Large Taxpayer Unit (LTU) Islamabad Ijaz
Hussain Shah has followed the FBR policy of enforcement and compliance through proper monitoring
and timely payments of refunds to the large taxpaying units of the country during current fiscal (2011-
2012). Through persistent efforts of the Chief Commissioner LTU Islamabad, the units falling within the
territorial jurisdiction of the LTU have paid their due amount of taxes during current fiscal.

Performance of LTU, Islamabad

The Large Taxpayers Unit, Islamabad has set a new record by collecting more than Rs.
20 Billion in just two days under the dynamic leadership of its Chief Commissioner, Syed Ijaz Hussain
and his untiring team.

The Large Taxpayers Unit, Islamabad collected Rs. 2.49 Billion from M/s Pakistan Mobile
Communications Ltd (Mobilink), Rs. 1.62 Billion from M/s Hub Power Co Ltd, Rs. 2.89 Billion from
M/s BHP Petroleum (Pakistan) Ltd, Rs. 1.70 Billion from M/s OMV (Pakistan) Exploration Ltd, Rs. 3.6
Billion from M/s Pakistan Telecommunication Authority and Rs. 3.50 Million from various telecom
companies.

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This is a big feat in the history of Federal Board of Revenue and unprecedented as nobody
else could achieve the standard set by the Large Taxpayers Unit, Islamabad to collect more than Rs. 20
Billion in just two days. All this happened due to untiring efforts in form of discussion and persuasion of
the tax-payers to avail amnesty regarding wavers of penalty and default surcharge recently announced by
the FBR.

Regional Tax Office (RTO)

Following are the Regional Tax Office (RTO‟s) are working in Pakistan as follow:

1. Peshawar
2. Abbotabad
3. Rawalpindi
4. Sialkot
5. Islamabad
6. Gujranwala
7. RTO-1 Lahore
8. RTO-2 Lahore
9. Sargodha
10. Multan
11. Bahawalpur
12. Karachi-i
13. Karachi-ii
14. Karachi-iii
15. Hyderabad
16. Sukkar
17. Quetta

Appellate Structure
Income Tax Appellate Tribunals are functional before partition. At present there are 20
Benches and each Bench consists of one Judicial and one Accountant Member, both in-BPS-21. There are
seven Benches at Karachi, 9 Benches at Lahore, 3 Benches at Islamabad including Headquarter Bench
and One Bench at Peshawar. The Headquarter of the Tribunal is at Islamabad and headed by a Chairman
who is in BPS-22.

DETAILS OF ACTIVITIES/FUNCTIONS
The Income Tax Appellate Tribunal is a quasi-judicial forum established under the
Income Tax Ordinance, 2001. During the preceding financial year, the activities of the Income Tax
Appellate Tribunal were as under:
 Heard and decided the appeals arisen out of the order of the Commissioner of Income Tax
(Appeals) Inspecting Additional Commissioner, regarding Income Tax/Wealth Tax which are
filed by the assessee or the Income Tax Department.
 Heard and disposed of stay applications.
 Heard and disposed of reference applications.

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 Heard the various types of Misc. Applications.

Customs, Excise and Sales Tax Appellate Tribunal


Customs, Excise & Sales Tax Appellate has been established under section 194 of
the Customs Act, 1969 and the powers and functions of the Appellate Tribunal are exercised and
discharged by Benches constituted by the Chairman from amongst the members thereto. Each Bench
adjudicates the matters provided under the Schedule and Act and administers the justice.

Sr. Name of Judicial and Date of Date of Expiry


Name of Court / Tribunals
No. Technical Member Joining of Tenure
Ch. Imran Masood,
-
Customs Excise & Sales Tax Member Judicial -
1 Appellate Tribunal (Bench-I),
07-05-
Lahore Mr. Khalid Naseem, 06-05-2012
2009
Member Technical
Mr. Shahid Mehmood Bhatti,
23-09-
Customs Excise & Sales Tax Member Judicial 22-09-2010
2010
2 Appellate Tribunal (Bench-II),
Lahore Mr. Mumtaz Haider Rizvi, -
-
Member Technical
Mr. Gul Munir Shah 27-6-2010
26-06-2013
Customs Excise & Sales Tax Member Judicial
3 Appellate Tribunal (Bench-I), 24-09-
30-04-2011
Karachi Mr. Javed Qazi 2008
Member Technical
Mr. M. Arif Moton
07-03-
Customs Excise & Sales Tax Member Judicial 06-03-2011
2009
4 Appellate Tribunal (Bench-II),
Karachi Vacant -
-
Member Technical
Ms. Kausar Sultana,
24-06-
Customs Excise & Sales Tax Member Judicial 23-06-2012
2009
5 Appellate Tribunal (Bench-III),
Karachi Mr. Fazal Qadir Qalbani, -
-
Member Technical
Mr. Ziaullah Kiani, 13-07-
Customs Excise & Sales Tax Chairman 2009 12-07-2011
6 Appellate Tribunal (Bench-I),
Islamabad Ms. Musarrat Jabeen, 10-01- 09-01-2012
Member Technical 2009
Customs Excise & Sales Tax Hafiz Ahsan Ahmed Khokar, 27-02- 26-02-2011
7 Appellate Tribunal (Bench-I), Member Judicial 2009

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Taxation

Islamabad 28-09-2012
Mr.Muhammad Arshad, 29-09-
Member Technical 2009
Vacant
-
Customs Excise & Sales Tax Member Judicial -
8 Appellate Tribunal (Bench),
09-09-
Peshawar Mr. Sher Nawaz 08-09-2013
2010
Member Technical

Previous Structure of Sales Tax


1. Collector Appeals

Collectors of Customs (Appeals): FBR required to clearly define functions

The Federal Board of Revenue has to clearly define the role and functions of the
Collectors of Customs (Appeals) while setting up new Collectorates of Customs (Adjudication) from July
1, 2012 to avoid overlapping of functions carried out by Collectors Appeals and Collectors Adjudication.
Tax experts told Business Recorder here on Friday that the FBR will issue a notification to set up six
Collectorates of Customs (Adjudication) from July 1, 2012. The purpose of establishing the Collectorates
of Customs (Adjudication) is to separate functions of executive from quasi-judicial fora. One of the
options is that the posts of the Collectors of Customs Appeals would remain intact and separate Collectors
of Customs (Adjudication) would be established across the country.
The second option is that the posts of the Collectors of Customs Appeals would be replaced with
the Collectors of Customs (Adjudication). The Collectors of Customs (Adjudication) may operate under
the supervision of the Collectors of Customs Appeals. There are strong changes that a separate setup of
the Collectorates of Customs (Adjudication) would be implemented from next fiscal and Collectors of
Customs (Appeals) would continue under the relevant provisions of the Customs Act, 1969. The
establishment of the separate Collectorates of Customs (Adjudication) would ensure that the taxpayers'
cases should be heard by an independent body without any influence and interference of the tax
department.
The question arises what would be the status of the appeals filed by the taxpayers pending with
the Collectors of Customs Appeals after establishment of the Collectorates of Customs (Adjudication)
from July 1, 2012. It is expected that the FBR will issue instructions to the Collectors of Customs Appeals
to specify the role and functions of the new setup of the Collectorates of Customs (Adjudication), they
said. Experts pointed out that at present Collector of Customs (Appeals) has been empowered to exercise
powers available under section 193 of the Customs Act, 1969. Under the existing procedure of appeals for
the taxpayers, any person other than an officer of customs aggrieved by any decision or order passed
under section 179 of the Customs Act by an officer of customs may prefer appeal to the Collector
(Appeals) within 30 days of the date of communication to him of such decision or order. Provided that an
appeal preferred after the expiry of thirty days may be admitted by the Collector (Appeals) if he is

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Taxation

satisfied that the appellant had sufficient cause for not preferring the appeal within that period. The
Collector (Appeals) shall give opportunity to the appellant to be heard if he so desires.
The Collector (Appeals) may, after making further inquiry as may be necessary, pass such order as he
thinks fit, confirming, modifying or annulling the decision or order appealed against, or may refer the
case back to the adjudicating authority with such direction as he may think fit for a fresh adjudication or
decision, as the case may be, after taking additional evidence, if necessary.
The order of the Collector (Appeals) disposing of the appeal shall be in writing state that points
for determination, the decision thereon and the reasons for the decision. On the disposal of the appeal, the
Collector (Appeals) shall communicate the order passed by him to the appellant, the adjudicating
authority and the Collector of Customs, they added.

2. All cases of custom, federal excise and sales tax


APPELLATE TRIBUNAL
Its mean Customs, Excise and Sales Tax Appellate Tribunal constituted U/S 194 of Custom act.

What is Appellate Tribunal?


“The Customs Appellate Tribunal” (also known as, Appellate Tribunal] is an appellate forum constituted
by The Federal Government, is called and consists of judicial and technical members to exercise the
powers and discharge the functions conferred on the Appellate Tribunal by Customs Act 1969. There is
also a Chairman appointed among the members above them.

The powers and functions of the Appellate Tribunal may be exercised and discharged by
Benches constituted by the Chairman from amongst the members thereof. Bench shall consist of one

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Taxation

judicial member and one technical member.


Such an Appellate Tribunal office for Punjab province is formed at Lahore, about 400KM off
Multan. Every appeal against a decision or order a deciding a case involving duty, tax, penalty or fine
exceeding five million rupees shall be heard by a Special Bench constituted by the Chairman for hearing
such appeals and such Bench shall consist of not less than two members and shall include at least one
judicial member and one technical member.

Is Appellate Tribunal a Judicial Forum?


Any proceeding before the Appellate Tribunal shall be deemed to be judicial proceeding
within the meaning of sections 193 and 228 and for the purpose of section 196 of the Pakistan Penal Code
(Act XLV of 1860), and the Appellate Tribunal shall be deemed to be a Court for all the purposes of
sections 480 and 482 of the Code of Criminal Procedure, 1898 (Act V of 1898).

Who may file appeal before Appellate tribunal and against what?
Any person or an officer of Customs aggrieved by any of the following orders may appeal to
the Appellate Tribunal against such orders:

1. an order passed by the Collector (Appeals) under section 193


2. an order passed under section 193, as it stood immediately before the appointed day
3. an order passed by the Board or the Collector of Customs under section 195
4. an order passed in revision by the Director-General Customs Valuation under section 25D,
provided that such appeal shall be heard by a special bench consisting of one technical member
and one judicial member.

When appeal before Appellate Tribunal should be filed?


Every such appeal shall be filed within sixty days (60) from the date on which the decision
or order sought to be appealed against is communicated to the Board or the Collector of Customs, or as
the case may be, the other party preferring the appeal.

The Appellate Tribunal may admit an appeal after the expiry of the relevant period referred to in
Customs Act, if it is satisfied that there was sufficient cause for not presenting it within that period.
What to do if appeal before Appellate Tribunal were filed against you?
On receipt of notice that such an appeal has been preferred against you (notwithstanding that
you not have appealed against such order or any part), then within thirty days of the receipt of the notice,
you file a memorandum of cross-objections verified in such manner as may be specified by rules made in
this behalf against any part of the order appealed against. Such memorandum shall be disposed of by the
Appellate Tribunal as if it were an appeal presented within the time specified for an appeal.
The Appellate Tribunal may permit the filing of a memorandum of cross-objections after the
expiry of the relevant period referred to in Customs Act, if it is satisfied that there was sufficient cause for
not presenting it within that period.

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Taxation

Format of Appeal:
An appeal to the Appellate Tribunal shall be in such form and shall be verified in such
manner as may be specified by the rules made in this behalf and shall, except in the case of a
memorandum of cross-objections, be accompanied by a fee of one thousand rupees (Pak Rs.1,000/-).
Orders of Appellate Tribunal
The Appellate Tribunal gives the parties to the appeal an opportunity of being heard. It may
pass such orders thereon as to confirming, modifying or annulling the decision or order appealed against.
The Appellate Tribunal shall send a copy of every order passed by it disposing of an appeal to officer of
Customs and in valuation cases also to the Controller, Valuation, and the other party to the appeal.Save as
otherwise expressly provided in section 196, an order passed by the Appellate Tribunal in appeal shall be
final.

What procedure the Appellate Tribunal will follow?


Subject to the provisions of Customs Act, the Appellate Tribunal shall have power to regulate its
own procedure and the procedure of the Benches thereof in all matters arising out of the exercise of its
powers or of the discharge of its functions, including the places at which the Benches shall hold their
sittings.
The Appellate Tribunal shall, for the purposes of discharging its functions, have the same powers
as are vested in a court under the Code of Civil Procedure, 1908(V of 1908), when trying suit in respect of
the following matters, Namely:-

(a) discovery and inspection;


(b) enforcing the attendance of any person and examining him on oath;
(c) compelling the production of books of account and other documents; and
(d) issuing commissions.

Customs, Excise and Sales Tax Appellate Tribunal


Customs, Excise & Sales Tax Appellate has been established under section 194 of the
Customs Act, 1969 and the powers and functions of the Appellate Tribunal are exercised and discharged
by Benches constituted by the Chairman from amongst the members thereto. Each Bench adjudicates the
matters provided under the Schedule and Act and administers the justice.

Appointing authority
The federal Government has the appointing authority of the appellate tribunal.

Members
The Appellate Tribunal consists of Two type of member‟s, as follow:

1. Judicial Member
2. Technical Member

The description of above mentioned members of Appellate tribunal as follow:

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1. Judicial Member
A person may be appointed as a judicial member of the appellate tribunal if the person:
a) Has exercised the powers of a district judge and is qualified to be a judge of a high
court; or
b) Is or has been an advocate of a high court and is qualified to be a judge of a high court.

2. Technical Member
Any officer of the customs and excise group equivalent to that a member, FBR

And

A person may be appointed as an accountant member of the appellate tribunal if the person is an officer of
the Income Tax Group equivalent in rank to the RCIT.

Chairman
The Federal Government shall appoint one of the members of appellate tribunal to be the chairman.

Previous structure of Income Tax


Appeal to the Commissioner Appeals
Following are the two types of Commissioner Appeals
1. Commissioner Appeal
2. All cases of Income Tax

The Description of all types as mentioned above as follow:

1. Commissioner Appeal
2. All cases Of Income Tax

The Appeal Commissioners for the purposes of the Income Tax Acts are appointed by the
Minister for Finance under Section 850 of Taxes Consolidation Act, 1997 (previously Section 156 of
Income Tax Act, 1967). The Appeal Commissioners are responsible for carrying out the statutory duties
assigned under the Taxes Consolidation Act, 1997 and related legislation, principally the hearing of
appeals by taxpayers against decisions of the Revenue Commissioners concerning taxes and duties.

Despite what may be suggested by the name of the Office, the Appeal Commissioners
hear appeals relating not only to Income Tax but also to Corporation Tax, Value Added Tax, Capital
Gains Tax, Stamp Duties, Capital Acquisitions Taxes (Gift Tax and Inheritance Tax), Residential
Property Tax, certain Customs and Excise Duties, Motor Vehicle Registration Tax and sundry other
matters arising under the Taxes Consolidation Act, 1997 and related legislation.

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Income Tax Appellate Tribunal


Income tax appellate tribunal is the highest appellate authority under the income tax
ordinance, 2001.If a taxpayer or commissioner of Income Tax (CIT) is not satisfied with the decision of
the commissioner‟s (APPEAL). The un-satisfied party may appeal the appellate tribunal. The basic
function of the tribunal is to hear the appeals against the decision of commissioner (Appeals).

Following are the contents of Income Tax Appellate Tribunal as per assignment requirement as discuss
below:

Appointment
Its means income tax appellate tribunal (ITAT) constituted U/S 130.of the Income tax
ordinance 2001. The appellate tribunal shall consist of a chair person and such other judicial and
accountant member as are appointed by the federal government having regard‟s to the need of the
tribunal. The income tax Appellate Tribunal (ITAT) is appointed by Federal Government.

Chairperson
 Federal Government shall appoint chairperson
 Head of the Appellate tribunal is called chairman. Chairman is appointed by the Federal
Government, generally out of the judicial members of the tribunal.

Member’s of ITAT
There are two types of Income tax appellate tribunal (ITAT) members, the federal Government appoint
the members of the ITAT considering their qualifications, as follow:

1. Judicial Member
2. Accountant member

The explanations of these two above mentioned members of ITAT as given below.

1. Judicial member
A person may be appointed as a judicial member of the Appellate Tribunal If the Person:

a. Has exercised the power of a District Judge and is qualified to be a High Court: or
b. Is or has been an advocate of a high court and is qualified to be judge of the High Court.
2. Accountant member
A person may be appointed as an accountant member of the appellate tribunal if the person:

a. Is an Income Tax Group Equivalent in rank to that of a chief Commissioner.


b. The commissioner of Income Tax or commissioner of Income Tax (APPEAL) having atleast three
years experience as commissioner.

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Appellate Tribunal (INLAND REVENUE)


APPELLATE TRIBUNAL INLAND REVENUE

Islamabad, the 8th October, 2010


Appellate Tribunal Inland Revenue Rules, 2010

S.R.O. 948(I)/2010, Islamabad, the 8th October, 2010. In exercise of the Powers
conferred by sub-section (12) of section 130 of the Income Tax Ordinance, 2001 (XLIX of 2001), the
Appellate Tribunal is pleased to make the following rules,

1. Short title and commencement. (1) These rules may be called the Appellate Tribunal Inland
Revenue Rules, 2010. (2) They shall come into force at once.

2. Definitions. (1) In these rules, unless, there is anything repugnant in the Subject or context,

(a) "Act" means the Federal Excise Act, 2005 or as the case may be the Sales Tax Act, 1990.

(b) "Authorized Representative" means:—

(i) In relation to a taxpayer a person duly authorized by the taxpayer under section
223 of the Ordinance, including a representative under section 172 of the Ordinance, to appear, plead and
act before the Tribunal.

(ii) In relation to a person who is liable to pay sales tax or excise duty a person duly authorized by
that person under the Sales Tax Act, 1990 or Federal Excise Act, 2005 or rules made there under to
appear, Plead and act on behalf of that person before the Tribunal; and

(iii) In relation to Inland Revenue Authorities a person duly authorized by the Federal Board of
Revenue or the Chief Commissioner In land Revenue or the Commissioner Inland Revenue by
notification in the Official Gazette to appear, plead and act as a departmental representative or a legal
advisor for such authority and any other person acting on behalf of the person so authorized.

(c) "Bench" means a Bench of the Tribunal constituted under sub-sections (6) and (7) of section 130 of
the Ordinance and includes the Chairperson or any other member sitting singly under sub-section (8) of
the said section;

(d) “Chairperson" means the Chairperson of the Tribunal;

(e) “Member" means a member of the Tribunal;

(f) "Ordinance" means the Income Tax Ordinance, 2001 (XLIX of 2001);

(g) “Prescribed form” means the form as prescribed in the rules made by the Board under section 237 of
the Ordinance or under these rules;

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(h) “Registrar” means the person who is for the time being discharging the functions of the Registrar of
the Tribunal, as may be assigned by the Chairperson and includes Deputy Registrar and Assistant
Registrar;

(i) “Tribunal” means the Appellate Tribunal Inland Revenue established by the Federal Government
under section 130 of the Ordinance and referred to as such under the Federal Excise Act, 2005 and the
Sales lax Act, 1990. It also includes, a Bench exercising and discharging the powers and functions of the
Tribunal.

3. Sittings of Bench. A Bench shall hold sittings at its headquarter or such other place as the Chairperson
may consider expedient.

4. Powers of Bench. (1) A Bench shall hear and dispose of such appeals and applications made under
the relevant Act or the Ordinance as are assigned by the Chairperson or any member authorized by the
Chairperson in this behalf. (2) In the absence of Chairperson and the member designated for the
purpose, the senior member may transfer an appeal or an application from one Bench to another Bench.

5. Dress, office hours and holidays. (1) The Chairperson and members of the Tribunal shall wear the
same dress as prescribed for the Judges of the High Court. (2) The Tribunal shall, subject to any special
order of the Chairperson observe the same office hours, holidays and period of recess as the High Courts
at respective places observe.

6. Language of the Tribunal. The language of the Tribunal shall be Urdu English.

Note: We found some PDF File’s about the Appellate Tribunal (Inland
Revenue), these files are attached in CD, Please Check it out.

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Taxation

Advantages and Disadvantages of New Setup of FBR


Here we would like to discuss some Advantages and Disadvantages of Federal Board Of Revenue New
Setup, as follow:

Advantages of FBR

A. Medical Coverage
FBR offers comprehensive medical, vision and prescription coverage to all
employees and their eligible dependents. Eligible Employees can choose between two Cigna
plans. FBR subsidizes the major share of the costs of this benefit and employee contributions are
made on a pre-tax basis.

B. Dental Coverage
Eligible Employees are offered dental coverage administered by MetLife, which
pays 100% of the expenses for in-network preventive, routine procedures. The plan also provides
tiered coverage for most other dental services. FBR subsidizes the major share of the costs of this
benefit and employee contributions are made on a pre-tax basis.

C. Life Insurance
FBR provides and pays for life insurance coverage equal to two times annual
earnings - up to $1,000,000 - for all eligible employees. The supplemental insurance premiums
are deducted from the employee's paycheck on an after-tax basis.

D. Disability Insurance
FBR offers and pays for both short-term and long-term disability insurance to
eligible employees. In addition, FBR employees have the opportunity to purchase supplemental
disability insurance which can be paid for through payroll deductions.

E. Travel Accident Insurance


FBR employees are covered with $1,000,000 of travel accident insurance for
business-related travel.

F. 401(k) Plan
Eligible employees may contribute up to 60% of their pay on a pre-tax basis to help
prepare for their future retirement. Eligibility to participate in the 401(k) plan is immediate.
Rollovers from other qualified plans are accepted.

G. Employee Stock Purchase Plan (ESPP)


Eligible employees may invest in FBR stock through after-tax payroll deductions.
The purchase price is discounted and the offering period is six months.

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H. Healthcare Flexible Spending Account


This is an optional benefit that allows eligible employees to make pre-tax
deductions to pay for eligible healthcare expenses.

I. Dependent Care Flexible Spending Account


Eligible Employees may elect to participate in this optional benefit that allows
them to make pre-tax deductions to pay for eligible dependent and child care expenses.

Disadvantages of FBR

A. Delay in tax refund

In the new set up of Federal Board Of Revenue some of the Federal Board
policies are not efficient due to which Delay in Tax Refund problem is happening increasingly.

b. Delay in duty drawback

In the new set up of Federal Board of Revenue the delay in duty drawback
problem arises due to which facing many problems, exporters of sports goods from Punjab now are
faced by a new problem in the form of delayed duty drawback payment. They are of the view that already
high interest rate is affecting the industry and delay in duty drawback is pushing the industry back foot as
they are facing liquidity crisis.

c. Low level of response to public correspondence

In the new set up of Federal Board of Revenue the Low level of response to
public correspondence is arises because Federal Board has such policies through which the Inter-
relation of Public were damaged.

d. Low level of response of mandatory time limits

In the new set up of Federal Board of Revenue the Problem arrises which is
Low level of response of mandatory time limit because the reputation of such particular
departments were loosed.

e. Low priority of dispute resolution

In the new set up of Federal Board of Revenue the problem arises which is
Low Priority of Dispute Resolution because mostly policies were changed and no sollutionwere
founded after a lot hurdle.

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f. Inconsistent decisions

In the new set up of Federal Board Of Revenue took some Inconsistent


decisions which are not in the positive way of Pakistan economy.

g. Discriminatory dispensations

In the new set up of Federal Board Of Revenue the problem arises which is
Discriminatory Dispensations which means:
Discrimination under section 23 includes

 Refusing to allow a person with a disability to enter premises or use facilities that the public is entitled or
allowed to enter or use. For example, refusing to allow a blind person accompanied by a guide dog to
enter a restaurant
 Imposing less favorable conditions on a person with a disability in entering premises or using facilities.
For example, providing wheelchair access only to more expensive seating areas in a theatre, or providing
access which is less convenient, dignified or safe than the access provided for other members of the
public
 Requiring a person to leave premises because they have a disability. For example, someone who has
slurred speech because of a brain injury being treated as if he or she is intoxicated.

h. Loss of files and case record

In the new set up of Federal Board Of Revenue the problem arises which is Loss of
Files and case records.

i. Poor handling of major tax fraud cases

In the new set up of Federal Board Of Revenue the problem arises which is poor
handling of major tax fraud cases which means that to cover up the cases from different officers the
management discard a lot files and cases.

j. Oppressive and arbitrary decisions

In the new set up of Federal Board Of Revenue the problem arises which is
Oppressive and arbitrary decisions which means that the management were not so efficient as required so
for making policies that management staff took Oppressive and arbitrary decisions which is really bad for
Federal Board Policies.

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k. Widespread inefficiency and corruption

In the new set up of Federal Board Of Revenue the problem arises which is Widespread
inefficiency and corruption which means that the new set up is not accurate for any particular country’s
economic way, the current set up is mainly entered in the corruption and inefficient activities e.t.c.

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Conclusion
After making this assignment we learn many thing from it because now a
days each and every institution need skills about any kind so this assignment gave us a sense
about making well assignment by using all the skills. Taxation Management really gave us an
extraordinary knowledge about basic techniques of Tax and how to make a good model and how
to make analysis about Tax Structure of any country, and how to impress our buyers, sellers or
others.

This assignment is really too tough but now after making it complete we come at a point
and that is not anything in the world is difficult but if we work with continuously hardworking
then the end achievements must reach us.

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References
“We Visit in MILLAT EQUIPMENT LIMITED (MEL) and met their with sale‟s officer and
account‟s officers for acknowledging our self about assignment as well”.

 http://education.lokoi.com/wp-content/uploads/2012/06/ORGANIZATION-
STRUCTURE-of-Federal-Board-of-Revenue-FBR.png
 http://www.fbr.gov.pk/ShowArticle.aspx?view=Article&ActionID=59&Arti
cleID=
 http://www.defence.pk/forums/economy-development/22908-pakistan-tax-
structure.html
 http://finance.kalpoint.com/highlights/business-news/fbr-acts-against-
leakage-of-secret-information.html
 http://www.ltukarachi.gov.pk/index.htm
 http://www.ltulahore.gov.pk/
 http://wikimapia.org/12723443/Large-Taxpayers-Unit-LTU-Islamabad-
%D9%84%D8%A7%D8%B1%D8%AC-
%D9%B9%DB%8C%DA%A9%D8%B3%D9%BE%DB%8C%DB%8C%D
8%B1%D8%B3-%DB%8C%D9%88%D9%86%D9%B9%D8%8C-
%D8%A7%D8%B3%D9%84%D8%A7%D9%85-
%D8%A7%D9%93%D8%A8%D8%A7%D8%AF
 http://tariqrasheedlaw.blogspot.com/2011/10/information-on-second-
customs-appeal-in.html

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We also present our


Assignment in soft copy
form with some other
important information. In
web pages form and in
word pages form; kindly
check it out the attached
CD.

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